The corporate regulator has settled a $2.5 million Federal Court class action against a Melbourne financial firm over advice given to investors in Westpoint.

The settlement will allow the clients of Glenhurst Corporation to recoup some of their investment in the collapsed property group, subject to final court approval.

QBE is a party to the proceedings as the firm’s professional indemnity (PI) insurer.

The Australian Securities and Investments Commission (ASIC) initiated legal action against Glenhurst in August 2008 alleging the firm was negligent and breached the conditions of its Australian financial services licence.

ASIC initiated a further action against QBE in the Victorian Supreme Court last year, seeking an indemnity under the terms of Glenhurst’s PI policy in respect of the claims made in the class action.

“If the court does approve the settlement it is anticipated that the liquidators of Glenhurst will, following payment by QBE and allowing for a period for any appeals, distribute compensation to group members in September,” ASIC said in a statement.

ASIC’s fifth settlement follows earlier agreements with Masu Financial Management, Professional Investment Services, Bongiorno Financial Advisors and State Trustees.